Cost of Living 4th Quarter 2012

The nonpartisan Missouri Economic Research and Information Center (MERIC) calculates and publishes comparative cost-of-living indices for the 50 states four times a year. MERIC's findings consistently show that on average the cost of living in Right to Work states is far lower than the cost of living in forced-unionism states. Image: MERIC

Recently the Jefferson City-based Missouri Economic Research and Information Center (MERIC) published comparative cost-of-living indices for the 50 states covering the fourth quarter of 2012.  (See the link above.)  The National Institute for Labor Relations Research has now used these data, plus MERIC’s indices for the previous three quarters of 2012 and U.S. Census Bureau-reported population data for the 5o states as of last July 1, to calculate average annual costs of living for Right to Work and for forced-unionism states.

Twenty-two states had Right to Work laws protecting employees from federal labor law provisions authorizing forced union dues throughout 2012.  One additional state, Indiana, is counted as a Right to Work state in the new Institute analysis, since its Right to Work law was adopted and took effect early in the year.  Twenty-six states lacked Right to Work laws throughout 2012.  One other state, Michigan, is counted as a forced-unionism state here, because its Right to Work law, though adopted in December 2012, does not take effect until next month.

The 23 Right to Work states combined had a population-weighted cost of living 5.5% below the national average in 2012. The 27 forced-unionism states combined had a population-weighted cost of living 13.5% above the national average.  (MERIC itself does not weigh states based on population size in calculating its indices.  For that reason, the national average for population-weighted states does not equal 100.)  On average,  forced-unionism states were roughly 20% more expensive to live in than Right to Work states.

The correlation between forced-unionism status and a higher cost of living is robust.  Not one of the 14 highest-cost states in 2012 has a Right to Work law.  But nine of the 10 lowest-cost states have Right to Work laws.

Correlation does not equal causality, but there is a case to made that compulsory unionism actually fosters a higher cost of living.  Union officials wielding forced-dues privileges funnel a large share of the conscripted money they reap into efforts to elect and reelect politicians who favor higher taxes on and heavier regulation of businesses, including the real estate and energy businesses.  And many economists credibly argue that excessive government regulation is a major factor behind high housing, energy, and other costs in forced-unionism states like California, New York, New Jersey, Connecticut and Massachusetts.

But even if it could be established that forced unionism did not cause higher living costs, the strong correlation between forced unionism and higher costs would still be relevant in assessing the economic impact of Right to Work laws.  What matters most to employees seeking better lives for themselves and their families and employers seeking good employees is not nominal wages and salaries. It is what those wages and salaries can buy in the location where they are earned.

That’s why, when U.S. Commerce Department data on annual wages and salaries and other types of income in the 50 states are published next month, honest efforts to make comparisons between Right to Work and forced-unionism states will always be informed by MERIC’s or some other nonpartisan comparative cost-of-living index.

 

 

Comments are closed.